I've been covering the transportation industry for 20 years. Past publications include The Charlotte Observer, Miami Herald and Sacramento Bee. I also worked for U.S. Airways, writing internal publications and speeches for the company's executives. I'm a graduate of Wesleyan University and have a master's in journalism from Columbia University. Unlike most bloggers, I don't hate airlines.

Airlines Pay the Price of Hurricane Sandy

US Airways said late Monday in a filing that Sandy reduced fourth quarter earnings by $35 million, including $15 million in October and $20 million in November. The carrier said bookings fell 13% in the days leading up to and following Hurricane Sandy, from October 24 through November 3. Close-in bookings, made zero to 13 days prior to departure, which generally involve higher ticket prices, fell by 21%. November passenger revenue per available seat mile fell by 2% and, as a result, will be flat compared with a year earlier, US Airways said.

Even before the US Airways announcement, analysts had been revising estimates for carriers impacted by the storm.

Dahlman Rose analyst Helane Becker on Monday said she reduced fourth quarter estimates by an average of 41% and full-year estimates by an average of 7% for the five airlines most impacted by the storm, which canceled more than 15,000 flights, In a weekly report, Becker said JetBlue and Spirit were most heavily impacted. For all affected airlines, “we expect the consensus estimates to trend down as the street adjusts for the hurricane,” she said, adding that “as a result of the storms, many airlines are seeing slowing traffic demand in December.”

US Airways, however, noted that its bookings have returned to normal.

Wolfe Trahan analyst Hunter Keay said that for JetBlue and Spirit, “Sandy appears to be having more of a negative impact than we previously expected, not from the impact during the storm but from the post-storm cleanup impact. The demand environment has been slow to recover as consumers in the affected areas have been focused on other matters apart from booking tickets.” JetBlue expects October/November earnings before interest and taxes to fall by $20 million to $25 million, while Spirit expects a decline of $32 million to $37 million for the full fourth quarter. Keay lowered estimates for both, while rating both as “peer perform.”

On the plus side, Becker said Alaska and Southwest had limited exposure to Sandy and may be good places to invest, given their strong balance sheets and historic results. Keay has an outperform rating and a $50 price target for Alaska. He said in a note on Friday that the carrier’s October passenger revenue per available seat mile growth of 2.7% was better than he expected and raised estimates.

Previously, Delta said it lost $20 million in October due to Sandy, while United said it lost $35 million in October. Keay has estimated that the total loss to airlines’ earnings before interest and taxes at $190 million.

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